Analysis of previous deals:
30M chart of the GBP/USD pair
The GBP/USD pair also formed a downward trend at the beginning of the new week, which is shown by the descending channel. Thus, at this time, the euro/dollar and the pound/dollar are moving almost identically, which helps a lot in trading, since it becomes clear that the factors affecting the exchange rate formation are now the same for both. And this, in turn, means that the main influence is either the US fundamental background, or is explained by the desire of the markets to buy the US dollar. Since there is no new background now, we explain this movement precisely for such a reason. Consequently, like the euro currency, the pound may continue to decline. The volatility of the pair on Tuesday was quite good – about 90 points. The movement itself was trendy, which is always good for traders, since the number of pullbacks against the trend is minimal.
5M chart of the GBP/USD pair
The movement of the pound/dollar pair was not the best on the 5-minute timeframe and, on closer inspection, similar to the movement of the euro/dollar pair only in general. For example, the euro/dollar pair was almost flat during the European trading session, and the pound/dollar was falling quite actively. But the second one was moving much less actively during the US trading session. As for trading signals, the first and main trading signal was formed near the level of 1.3652, when the price returned to it after an overnight downward move. In fact, the price did not reach it exactly by a point, but this error can be ignored. Perfect accuracy signals are formed infrequently. Therefore, at this moment, novice traders could safely sell the pound/dollar pair. By the beginning of the US trading session, the price reached and crossed the area of 1.3598-1.3603. Later, it also worked it out from below, which was another sell signal. Therefore, newcomers could simply stay in short positions, which were still open at the morning signal. Well, in the late afternoon, the deal could be closed manually, since the movement, in fact, ended. As a result, the entire movement from the high to the low was about 70 points. It was possible to earn very well. We remind you that not every day in the forex market must necessarily be profitable, but when there is a good movement, you should try to work it out to the maximum.
How to trade on Wednesday:
A downward trend has formed on the 30-minute TF, so at this time we are paying more attention to sell signals. Of course, strong buy signals can also form on a downward trend. You can also try to work them out (if they are not ambiguous), but do it, for example, with a half lot. So far, we expect the downward movement of the pound/dollar pair to continue. On the 5-minute TF tomorrow, it is recommended to trade by levels 1.3521-1.3531, 1.3561, 1.3598-1.3603, 1.3652-1.3660, 1.3688-1.3695. In general, the pair may adjust slightly upward during the day, but we will wait for a new drop in quotes. It is unlikely that the macroeconomic background will somehow help this. The publication of an inflation report in the UK is scheduled for tomorrow and, most likely, this indicator will continue to accelerate as well as in the EU or the US. And this, in turn, can provoke the growth of the pound. But the problem is that the market ignored today's statistics. The same thing happened on Friday. Therefore, the same thing will probably happen tomorrow.
Basic rules of the trading system:
1) The signal strength is calculated by the time it took to form the signal (bounce or overcome the level). The less time it took, the stronger the signal.
2) If two or more deals were opened near a certain level based on false signals (which did not trigger Take Profit or the nearest target level), then all subsequent signals from this level should be ignored.
3) In a flat, any pair can form a lot of false signals or not form them at all. But in any case, at the first signs of a flat, it is better to stop trading.
4) Trade deals are opened in the time period between the beginning of the European session and until the middle of the American one, when all deals must be closed manually.
5) On the 30-minute TF, using signals from the MACD indicator, you can trade only if there is good volatility and a trend, which is confirmed by a trend line or a trend channel.
6) If two levels are located too close to each other (from 5 to 15 points), then they should be considered as an area of support or resistance.
On the chart:
Support and Resistance Levels are the Levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Red lines are the channels or trend lines that display the current trend and show in which direction it is better to trade now.
The MACD indicator (14,22,3) consists of a histogram and a signal line. When they cross, this is a signal to enter the market. It is recommended to use this indicator in combination with trend lines (channels and trend lines).
Important speeches and reports (always contained in the news calendar) can greatly influence the movement of a currency pair. Therefore, during their exit, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners on Forex should remember that not every single trade has to be profitable. The development of a clear strategy and money management are the key to success in trading over a long period of time.
